Sports

Scrumtious: Retailer gets into another gear

By Chris Roush

A 1995 Inc. magazine article questioned whether Mike Moylan, CEO of Hillsborough-based soccer-equipment retailer Sports Endeavors Inc., had put his passion for the game above his stewardship of the business. The Fan Versus the Businessman detailed how Sports Endeavors, which Moylan and other family members started in 1984, had ridden catalog and Internet sales to become the country's top soccer retailer. But it faced a threat from Durham-based TSI Soccer Corp., which Inc. hinted was being operated by a savvier businessman, Evan Jones.

Inc. got the fan part right. Moylan is a fan and former player, good enough when he played at a Durham high school to be recruited as a college athlete before accepting an academic scholarship at Georgetown University, where he played while earning a business degree. And Sports Endeavors' lobby is a soccer shrine: It displays autographed jerseys from top players such as France's Zinedine Zidane, Great Britain's David Beckham and Brazil's Renaldo and a ball autographed by retired superstar Pele. Nearly all its employees still play the sport.

But just because Moylan is a fan doesn't mean he isn't a businessman. As Paul Harvey would say, here is the rest of the story. TSI Soccer was acquired by New York-based retailer Delia's in 1997 for about $7 million - not a bad deal for Jones. In January 2001, Delia's decided to sell TSI. Sports Endeavors was a willing buyer - as long as Delia's kept the ailing retail soccer stores. "We acquired our largest competitor without meeting anyone," says Brendan Moylan, the company's chief operating officer and the CEO's younger brother. "It was all done by fax and voice mail." The Moylans won't say how much they paid, but Delia's eventually recorded a $5.8 million charge.

Bottom line: Sports Endeavors remains the nation's largest seller of soccer equipment, doing it Moylan's way, which mixes salesmanship with promotion of the sport. Moreover, that acquisition allowed Sports Endeavors to expand its team business, selling jerseys and equipment to youth soccer organizations such as Raleigh's Capital Area Soccer League. "TSI had been very successful in team sales, which we had not focused on," Brendan Moylan says.

So when it came time for their latest expansion - again into a niche sport - it made sense that the Moylans looked for a business run by a fanatic much like themselves. Last summer, Sports Endeavors acquired Birmingham, Ala.-based 365, which sells rugby equipment online, but decided to keep founder Bernard Frei, a Brit, in charge. "His true passion is the growth of rugby in the United States," Brendan Moylan says.

Frei had started the business in 1998 and had sponsored the U.S. rugby team during the 1999 World Cup. He also ventured into soccer, launching an online store in February 2001. Frei's rugby business featured an online store at www.worldrugbyshop.com, with estimated 2004 sales of $6 million, and a news site at www.rugbyrugby.com.

After the deal closed, the Moylans kept all of the marketing and creative direction of the rugby operations in Birmingham under Frei's leadership, but order processing and shipping was moved to North Carolina. Frei says he was having difficulty keeping up with his two warehouses in Alabama, so he was happy to hand off that business to Sports Endeavors.

But he also was attracted to the Moylans. "We had several people come to us in the past, and one is a lot bigger than Sports Endeavors, but what stood out were Mike and Brendan. They brought a wealth of mail-order skills." They helped introduce a World Rugby Shop catalog last fall. It was sent to about 175,000 potential customers.

The business already is well-known among rugby players. "Their supply of officially licensed products is certainly exhaustive, while many other rugby-related sites are more likely to feature only a few brands," says Jimmy Ivory, a former University of Wyoming player who helped coach a rugby team at East Chapel Hill High School the past two years. "World Rugby Shop is generally more of a venue for individual players and fans than a team supplier, though they do sell team gear."

The brothers actually had used a similar strategy a decade earlier when they founded Great Atlantic Lacrosse, whose president is former UNC player Chad Watson, another fan/promoter. Along with soccer, Brendan Moylan says, rug-by and lacrosse are "community-based sports, and people are very passionate about these sports."

Focusing on sports with a cultlike following among players and fans has worked for Sports Endeavors. Revenue has increased from $15 million in 1992 to more than $150 million in 2005. Its 80,000-square-foot warehouse - a former furniture factory on U.S. 70 - ships 15,000 to 20,000 orders per day and stocks more than 18,000 items. And the company, which has 190 full-time and 350 part-time employees, is on target to double revenue by 2008 - a goal established by its senior management. "You want more wins than losses and to put some good numbers on the board," Moylan says.

The brothers think there are good business reasons to expect their rugby and lacrosse sales to grow. The Washington, D.C.-based Sporting Goods Manufacturers Association estimates that U.S. high-school lacrosse teams tripled to 1,721 between 1990 and 2001, and the 16-team USA Rugby Super League is adding franchises in Charlotte and St. Louis for the 2006 season. The brothers also believe that they can continue to expand the core soccer business by playing to an underserved part of the U.S. market. Although Sports Endeavors distributes a Spanish version of the Eurosport catalog, it has not targeted the growing soccer-crazy Hispanic market in the U.S.

The company also has considered opening brick-and-mortar stores, Brendan Moylan says, "but we would have to find a partner before we consider that. It's not to rule it out. It's just not something we understand." Sports Endeavors does a brisk walk-up business at its warehouse, as players from around the country make pilgrimages when they're nearby.

Moylan, watching two customers walk out with bags full of soccer equipment, knows there are more people to reach. "There are still vast pockets of the country where the game is not played competitively. It's definitely not a saturated market." The fan in him still can't understand why.